Shanghai's real estate market finally entered a correction in August amid setbacks in both volume and price.

About 23,700 properties were sold across the city last month at an average price of 12,700 yuan (US$1,859) per square meter, a drop of 18 percent in volume and a retreat of 1 percent in price, according to latest research by Century 21 China Real Estate.

"Notably the price decrease, though very slight, was the first in 10 months while transaction volume has been losing strength for two straight months," said Huang Hetao, a researcher at Century 21 China Real Estate, which runs the city's second-largest brokerage chain. "A drop in both volume and price indicated that a real correction might have started."

Across the city, only three suburban districts of Fengxian, Jinshan and Qingpu registered increases in volume while districts of Huangpu, Jing'an, Xuhui and Yangpu all recorded significant decrease of more than 30 percent, Century 21 statistics showed.

A stricter down payment rule on second homes, coupled with widened price gaps between sellers and buyers, has been hindering sales of existing homes, industry analysts said.

In particular, sales of existing properties costing less than 900,000 yuan per unit continued to shrink in August, accounting for 59 percent of total deals secured last month. Meanwhile, those with a price tag of between 900,000 and 1.5 million yuan, 1.5 million to 3 million yuan and 3 million to 5 million yuan, all gained slightly, taking 26 percent, 11 percent and 2 percent, respectively.

(Shanghai Daily September 8, 2009)